Zenith Sets Restructuring Plan

Moving to reorganize its debt-saddled company, the manufacturer of Zenith television sets unveiled a sweeping plan Thursday that would do away with its common stock and leave shareholders nothing in return.

Zenith Electronics Corp. also said it will convert about $200 million of debt held by South Korea-based LG Electronics, its majority stockholder, into common stock representing 100 percent of the equity in the restructured Zenith.

"Today, we are taking a major step forward in our efforts to improve Zenith's financial health," CEO Jeffery P. Gannon said in a statement.

It wasn't immediately clear how Zenith would execute the unusual plan to cancel stock and not pay out some form of credit to shareholders. The company wasn't available for comment.

Zenith did note, however, that an independent group of directors had reviewed and approved the blueprint for change, which includes plans to file for Chapter 11 bankruptcy protection.

"Completing the plan will permit Zenith to emerge from the reorganization as a stronger, revitalized company before year-end 1998," the company statement said.

In addition, some $210 million in claims held by LGE will be exchanged for Zenith manufacturing assets in Mexico, plus secured notes due in 2008.

LGE will provide an additional $60 million of credit support to finance the plan. Zenith will continue to pay creditors, and vendors; employees will continue to be paid as well.

Written by By Steve Gelsi